A few months ago, my credit card bill came in the mail and below the balance due was a little blurb that advised me that if I continued to pay only the minimum payment, I’d pay off my card in exactly 26 years and 11 months. Alternatively, it pointed out, if I paid an extra $80 a month, I would reduce that time down to 3 years and 3 months and save my self, wait for it…$10,100 in interest payments.
I don’t know about you but I’m no Richie Rich. However, I can spend $80 fairly easily on a nice dinner with friends or a therapeutic shopping trip to Winners or even a few, accumulated “non-essentials” trips to Safeway over the month. In fact, I decided that I didn’t even have to give up any of those things if I just took more time to plan my grocery list and stuck to a budget that shaved off just $20 a week in groceries.
It’s been three months since I called my credit card company and had them increase my monthly payment and I can honestly say, I don’t miss the $80 at all but I will certainly feel the effects of having paid that credit card off by 2014 instead of 2038. It also means that I will pay off a relatively modest credit card balance while I’m in my early forties instead of my late 60’s, when I’m a grandmother. Yeah. Pretty compelling and totally worth the Oreos, chips & dip and fancy pesto I leave on the grocery shelf to make my extra $80 a month payment.
Your credit card company may not be so gracious as to point these things out to you so here’s a cool financial tool I’ve come across to help you calculate just how much you can save by changing your monthly payments and how long it will take you to become debt free.
Check it out here – I guarantee you’ll find this calculator from CNN Money very educational and you’ll probably be pleasantly surprised how little it takes to put a huge dent in your debts. Don’t forget to give First Foundation’s mortgage pre-payment calculator a whirl to watch the same magic happen in regards to your mortgage.